THE AMENDED MASSACHUSETTS EQUAL PAY ACT GOES INTO EFFECT ON JULY 1, 2018: WHAT EMPLOYERS NEED TO KNOW

Published on: May 16, 2018

The Massachusetts Equal Pay Act, as amended (“MEPA”), takes effect on July 1, 2018, and it is aimed at providing greater fairness and equity within the workplace, and it will apply to all employers in Massachusetts (apart from federal employers) regardless of size.

MEPA applies equally to condominium association employers with only a few onsite employees, as well as to property management companies based both in-state and outside of Massachusetts. To that end, employers based outside of Massachusetts may be subject to MEPA, if they have employees “with a primary place of work in Massachusetts,” in which case, the employer is expected to compare the wages of their Massachusetts employees to employees performing comparable work “within the same geographic area within Massachusetts…unless excluding out-of-state employees from the analysis is not reasonable under the circumstances.”

Under MEPA, “[n]o employer shall discriminate in any way on the basis of gender in the payment of wages, or pay any person in its employ a salary or wage rate less than the rates paid to its employees of a different gender for comparable work.”

MEPA defines “wages,” as including “all forms of remuneration for work performed,” which means not only an employee’s salary or base pay, but also “commissions, bonuses, profit sharing, paid personal time off, vacation and holiday pay, expense accounts, car and gas allowances, retirement plans, insurance, and other benefits, whether paid directly to the employee or to a third-party on the employee’s behalf.”

Further, MEPA defines “comparable work” as “work that is substantially similar in that it requires substantially similar skill, effort and responsibility and is performed under similar working conditions; provided, however, that a job title or job description alone shall not determine comparability.” However, under MEPA, employers must evaluate their employees’ job duties and responsibilities to determine whether they are “comparable,” and job title alone is not controlling, especially because jobs do not need to be identical in order to be comparable.

Employees may receive different wages for “comparable work,” only if the wage differential is based upon: 1) “a seniority system” (however, time off for parental, family and medical leave does not reduce an employee’s seniority status); 2) a “merit system”(where pay and/or wages are based on employee job performance and wages are based on “legitimate, job-related criteria”); 3) a “system which measures earnings by quantity or quality of production, sales, or revenue;” 4) the “geographic location” (this means that an employer may justify different wages among its  employees, if there are different costs of living and/or differences in the labor market among employees based out of different locations); 5) “education, training or experience to the extent such factors are reasonably related to the particular job in question” (provided that a “reasonable employer” would determine that such education, training, or experience “would help the employee to perform the particular job in a more efficient or more effective manner”); and 6) “travel,” (if travel is “a regular and necessary condition of the employee’s job,” but travel is not considered “necessary” simply because an employee chooses to travel, and “regular commuting to or from a work location” does not qualify as “travel” under MEPA, to justify wage disparities).

Additionally, under MEPA, employers cannot ask any prospective employee about their salary or wage history. Further, employers may not prevent employees from disclosing or discussing their wages, and employers may not retaliate against any employee who exercises his or her rights under the law.

Under MEPA, employees have three (3) years from the date of an alleged violation to bring an action in court, with a violation occurring each time that an employee is subjected to and/or affected by a discriminatory compensation decision or practice (so each paycheck may constitute a new violation under MEPA). An employer who violates MEPA may be liable for double damages (twice) the amount of the unpaid wages owed to the employee(s) (with the amount determined by calculating the difference between the affected employee’s wages and the wages paid to an employee of a different gender performing comparable work), as well as the reasonable attorneys’ fees and costs incurred by the employee in pursuing their claim.

Fortunately, MEPA provides for a “safe-harbor” provision for employers. While employers are not required to conduct self-evaluations, and they will not be penalized for electing not to do so, under MEPA’s safe-harbor provisions, an employer may be immune from liability from claim under MEPA if: (i) the employer, within the previous three (3) years before an action is filed against it, conducts a good faith (meaning genuine) “self-evaluation” of its pay practices that is reasonable in detail and scope; and (ii) if the employer demonstrates reasonable progress toward eliminating any wage disparities between employees performing comparable work, as identified through the self-evaluation process.

There is presently no clear checklist for determining whether a self-evaluation was done in “good faith,” i.e., that it was “reasonable in detail and scope,” and such determination will likely be decided on a case-by-case basis. However, for purposes of considering whether “reasonable progress” has been made “toward eliminating disparities” courts will likely take into account the length of time that has passed since the employer first identified any wage disparities amongst its employees, and the actions that the employer has subsequently taken in order to eliminate such disparities, taking into account the size and resources of the employer.

If an employer’s self-evaluation is ultimately determined to be lacking in detail or scope, but it was nonetheless conducted in good faith, and the employer has made reasonable progress toward eliminating any identified pay disparities, the employer may not ultimately be required to pay double damages for a MEPA violation, but it may still be liable for the affected employee(s)’ unpaid wages that would otherwise be due, together with the employee’s reasonable attorneys’ fees and costs incurred in pursuing their claim(s).

Accordingly, prior to July 1, 2018, employers should familiarize themselves with MEPA’s provisions, and engage in the self-evaluation contemplated under MEPA’s “safe-harbor” provisions. Thereafter, all employers should at least start the process for eliminating any identified wage disparities among their employees.

For further information, please contact Jennifer L. Barnett at jbarnett@meeb.com.